After a week of harsh U.S. criticism over what it saw as an Israeli “insult” to Vice President Joe Biden, the Obama administration toned down the rhetoric Tuesday as Secretary of State Hillary Clinton dismissed suggestions that there was a crisis in U.S.-Israeli relations.

“We have an absolute commitment to Israel’s security,” she told reporters in Washington. “We have a close, unshakable bond between the United States and Israel and between the American and Israeli people who share common values and a commitment to a democratic future for the world.”

Just last Friday, Israel’s ambassador to Washington, Michael Oren, reportedly said in a conference call with other Israeli diplomats that U.S.-Israeli relations had hit a 35-year low.

Clinton also told reporters that she was awaiting Israel’s response to her request that it prove its commitment to peace. Israeli Prime Minister Benjamin Netanyahu welcomed Clinton’s remarks and said in a statement that he had demonstrated his commitment to peace “both in words and actions.” He cited his decision to pursue a two-state solution, the 10-month freeze on West Bank construction, and the removal of hundreds of roadblocks across the West Bank.

Netanyahu added that he wants to resume talks with the Palestinians “without preconditions.” He is scheduled to fly to Washington Sunday to address next week’s the annual meeting of AIPAC, the pro-Israel lobby.

Clinton is also expected to speak to the group, and crowd reactions will be carefully noted.

“My guess is Hillary will probably talk about the need for Israel to continue stretching for peace and will praise Israel for the temporary settlement freeze and its willingness to come to the table,” said Steve Gutow, president of the Jewish Council for Public Affairs.

Abraham Foxman, national director of the Anti-Defamation League, said the administration is also beginning to turn up the pressure on the Palestinian Authority.

“For the first time in a year the State Department was critical of what the Palestinians were saying about the rededication of a synagogue” in the Jewish quarter of Jerusalem, he said.

That rededication of the Hurva Synagogue, an historic synagogue that was destroyed by Jordan after the 1948 War, helped to spark rioting in Jerusalem on Tuesday. Palestinian demonstrators, who had been urged to take part in a “Day of Rage,” took to the streets to throw rocks at Israeli soldiers. Some 60 demonstrators were arrested, nine Israeli security officers were hurt, as were 40 demonstrators.

David Harris, executive director of the American Jewish Committee, said the tensions between the U.S. and Israel should be seen as a time when there should be “intensified discussions between mainstream American Jewish groups and our administration.

“At times like this we need to talk to each other behind closed doors constructively,” he said. “We have shared interests to reinforce the U.S.-Israel relationship and to help move the peace process forward. If those relations should fray, it would be a disincentive to moving the peace process forward.”

While few experts predict any long-lasting damage to the U.S.-Israel alliance, there is growing concern the rapidly escalating squabble could prove a critical distraction at a time when Washington and Jerusalem seemed to be on the same page on the overarching issue of Iran.

“In three weeks, or three months, this crisis will be behind us, and it will be just one more point in the history of U.S.-Israel relations,” said Kean University political scientist Gilbert Kahn.

Kahn is not as sanguine about the impact of the diplomatic dustup on the effort to prevent Iran from going nuclear.

He said coordination between the U.S. and Israel had gone very well, but that the Biden episode diverted focus.

“Now all the chips the American Jewish community had stacked up are being used to tell the administration that they’re coming down too hard and too fast on Israel,” according to Kahn. “Instead of having those chips available for existential issues Israel faces, they’re being spent on a flap that should never have happened.”

The fast-moving diplomatic crisis could also make it harder for AIPAC to keep Iran as the overarching focus of its convention, several pro-Israel activists said this week.

The perceived slight to Biden came last week after he had announced in Jerusalem that indirect Israeli-Palestinian peace talks would resume after a 15-month hiatus. Just hours later as Biden prepared for a private dinner with Israeli Prime Minister Benjamin Netanyahu, the Israeli Interior Ministry announced that 1,600 new Jewish housing units had been approved for east Jerusalem. The move prompted the Palestinians to cancel the talks until the housing project was canceled.

Although Israeli Prime Minister Benjamin Netanyahu apologized to Biden for the timing of the housing announcement and called it a “harmful” incident that “should not have happened,” he told the Knesset Monday that the project would continue.

“For the past 40 years, no Israeli government ever limited construction in the neighborhoods of Jerusalem,” he said.

Clinton’s remarks Tuesday were in contrast to her comments to Netanyahu in a 43-minute phone conversation last Friday. Reportedly acting at the behest of President Obama, Clinton complained that the new housing units sent a “deeply negative signal” about Israeli-American relations. Her spokesman, Philip Crowley, said Clinton told the prime minister that Israel’s action had harmed “the bilateral relationship.”

Netanyahu is reported to have apologized for the announcement, saying it had caught him by surprise. But Crowley said Clinton replied that she “could not understand how this happened, particularly in light of the United States’ strong commitment to Israel’s security.”

Clinton’s softer remarks Tuesday appeared designed to change the tone of the discussion, something Netanyahu immediately embraced. In a statement, he said Israel “appreciates and respects the warm words said by Secretary of State Hillary Clinton regarding the deep bond between the U.S. and Israel, and on the U.S.’s commitment to Israel’s security.”

The warm words by Netanyahu and Clinton were “welcomed” by William Darroff, director of the Washington office of the Jewish Federations of North America and vice president of public policy.

“We’re seeking a renormalization of the relationship,” he said. “The U.S. and Israel are the closest of allies in the world, and that is what we are looking for.”

The Jewish Federations and the Jewish Council for Public Affairs signed onto a statement released earlier in the day by the Conference of Presidents of Major American Jewish Organizations calling on the U.S. and Israel to resolve their differences “with the use of language reflecting their historic friendship.”

It complained that the “unusually harsh comments” made by the Obama administration had “resulted in increased tensions.” It suggested that a “prompt commencement of the proximity talks that had been previously agreed to by all parties.”

On the Jewish left, J Street, which describes itself as “the pro-Israel, pro-peace” lobby, said it delivered 18,000 signatures to the White House this week agreeing with Biden’s statement that “sometimes only a friend can deliver a hard truth” and calling on the administration to “turn this crisis into an opportunity for progress on two states.”

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